Column: the new (former) Shell answer man

I interviewed John Hofmeister a few times when he was president of Shell Oil Co., and we stayed in touch after he retired this summer. A few weeks ago, he suggested we get together, and we wound up meeting at the Breakfast Klub near downtown to talk about energy over coffee and egg sandwiches.

Hofmeister is devoting his retirement to expanding the public’s understanding of energy issues, something he began at Shell but felt had limited success. Now free of corporate ties, he’s formed a grass-roots organization, still in its infancy, called Citizens for Affordable Energy.

During an appearance on CNBC early in the summer, John Hofmeister made a startling statement: "Oil isn’t a free market."

Soon after he said it, the show cut to a commercial and someone handed Hofmeister, who was about to retire as president of Shell Oil Co., a piece of paper. It was a message from Shell’s headquarters in the Netherlands telling him he couldn’t say that. He crumpled up the note, went back on the air, and repeated his statement.

"The myth of the free market still resonates as if it’s a reality," he told me recently over coffee and egg sandwiches at the Breakfast Klub. Oil markets, he said, are regulated at every step in the route from the well to the gas pump.

Customers can choose to buy their gasoline from a Shell or Exxon station, but Exxon Mobil and Shell are limited in choosing where they buy their oil. Most available crude comes from the OPEC cartel or other state-run oil companies. Until Americans understand how little control the U.S. and its corporations have over global energy supplies, we remain economically vulnerable, he said.

Hofmeister, who showed up wearing the official uniform of retirement — Hawaiian shirt, khaki shorts, black tennis shoes and white socks — spent his final years at Shell trying to explain the nation’s looming energy crisis to the public. He feels that despite "town hall meetings" in more than 50 cities, he largely failed.

Now he’s trying again.

Everyone these days seems to have an energy plan. Heck, I even posted my own five-point proposal. But Hofmeister brings some executive suite cred, and his "four mores" make a lot of sense. Got your own ideas for how to fix our energy problems? You can post them here, or join in and start a discussion here.

5 Responses

The way to open the oil market is to become independent from it. Why is the western world not jumping on methods as described in the news article below? The researchers are working on the basis of donations, rather then on the basis of programmed government funds. What are we waiting for?

Gijs van de Voorde

July 31, 2008

In a revolutionary leap that could transform solar power from a marginal, boutique alternative into a mainstream energy source, MIT researchers have overcome a major barrier to large-scale solar power: storing energy for use when the sun doesn’t shine

Until now, solar power has been a daytime-only energy source, because storing extra solar energy for later use is prohibitively expensive and grossly inefficient. With today’s announcement, MIT researchers have hit upon a simple, inexpensive, highly efficient process for storing solar energy.

Requiring nothing but abundant, non-toxic natural materials, this discovery could unlock the most potent, carbon-free energy source of all: the sun.

Interesting comments from him, Loren. And he’s right. He’s saying much the same things as others before him have been saying for the past 50 years. Maybe if enough people start listening and demanding some action, instead of just posturing by politicians, we might actually be able to make some progress.

But I fear that the vast majority of people just aren’t listening. Not just in the USA, but around the world. When companies like TATA offer dirt cheap ICE cars to literally a couple of billion people who have never had anything other than their feet, or bring fossil fuel generated electricity to other billions who have never had it, what else can we expect?

Energy=political power, as Rickover made a point of in 1957. Remember the “Golden Rule”? He who has the gold (oil and other high quality energy resources ) makes the rules.

To remain focussed: About 4 percent of the world’s annual oil production is used as feedstock for plastic, and another 4 percent provides the energy to transform the feedstock into handy plastic.

But also here is becoming less dependent from oil an option: according to the U.S. EPA, manufacturing new plastic from recycled plastic requires two-thirds of the energy used in virgin plastic manufacture.

Another 8% is used for pharmaceuticals, solvents, fertilizers and pesticides – the other 84% is used for energy production.

Of course we can’t stop using oil, but for sure we can become less dependent from oil. If politicians focus too.

It’s alot more than 4%, especially polyethylene, which is in everything you touch, including your clothes, shoes, car parts, medicines, computers, paint, window tint, and food containers. Sorry, but there are entire refineries that do nothing but process millins of BBLS just for plastic.